Despite their concerns about climate change, the wealth gap is rising at the same rate as the global wealth gap, according to a new book from the LSE, London School of Economics and University of Cambridge Center for the Analysis of Human Capital. That means the world’s wealthiest people are losing their share of the total pool of wealth, and if rich people don’t help, they could be left out of the solution.
Dan Davies is the author of Global Inequality and asks why the wealthy are so concerned with the global climate crisis, but not at home. He predicts a very low probability that the existing majority will have to “walk off the planet” if a significant greenhouse gas emissions reduction occurs. He quotes economist Gabriel Zucman, who calls the 1 percent “the producers of climate change” because of their “emissions of greenhouse gases from production, transport, distribution, and retailing” and believes the “diluting” of carbon credits would create climate “legacy capital” even if a cost-effective clean energy revolution were to take place.
Davies points out that fossil fuel taxes are not particularly effective since they act more as economic drag on growth. As time passes, even a rapid emission reduction would still not spare “a majority-less wealthy economy,” which is why he suggests what he terms “market activated innovation”, which describes incentives for entrepreneurs to develop products and services using nature to reduce their carbon footprint. He points out that investors in electric cars would share carbon credits with the car company in which they have invested, thus stabilizing the cost of these products.
There are some cities where renewable energy sources will make a difference. New York has already made a clean energy commitment, Massachusetts is striving to be carbon-neutral by 2050, and California is also taking steps. The U.S. will be the biggest market for electric cars, and U.S. renewable energy markets are more resilient, Davies says. The U.S. is home to 30 percent of the world’s wind capacity, 21 percent of the world’s solar capacity, and nearly 18 percent of the world’s hydropower capacity. It will continue to be important, even if the country adopts a minimum standard.